Growing and the corona crisis: how do you see the future?

The coronavirus has the world in its grip and also the agricultural sector, I am well aware of that. While reading the magazines, texts such as: 'Trading houses gloomy about the export of seed potatoes' or 'Stable dairy market, but hardly any market' or 'Second corona wave hits FrieslandCampina hard.' How ready are you for the future and how do you view it?

In times of change, it is more important than ever to keep developing. In this article 'Growth and the Corona crisis' put how experiences we experience in practice, in a row. The corona crisis may not pass your door either. First and foremost wish ik wish you a lot of health and strength in daily life and just what the government says: 'watch each other a little.'

The buyer becomes more important
In recent years, there were several buyers for beautiful companies, or parts of them. Sellers were in charge. The current development may cause more companies to close and the supply to increase. This assumption was recently confirmed by reports from Wageningen UR (WUR), in which the university indicated that the number of dairy farms will decrease by a third until 2030 (within 10 years!). This seems to give buyers more control.

cash is king
Although the Netherlands is modest in size, the differences in land prices between areas are large and therefore difficult to lump together. The most recent 'Agricultural land market quarterly report, 2020 – second quarter' of the Land Registry, publishes a national average price of €62.000 per hectare. This is equal to the average price for 2019 and 3,7% lower than in the first quarter of 2020. The traded area has also decreased slightly in the past 4 quarters.

Furthermore, companies run into problems because the profitability leaves something to be desired. The bank takes a close look at this, bases its assessment on this and determines whether it wants to continue or not. In previous articles I indicated that the land market is special and that we - just like others - do not know the thinking of potential buyers. Nevertheless, the price of companies, land and buildings may fall in certain areas and circumstances. In short, opportunities for buyers who have resources or can make them available quickly.

Land of the neighbor
Unique buying opportunities that never occurred can emerge right now. Think of a neighbor, a race entrepreneur with a wonderful company who no longer feels like it and where there is no succession. This may offer opportunities to further develop your company.

In addition to financial resources, it takes a lot of courage to dare to strike. If you want something, don't wait too long. Because just like always, before you know it, the opportunity will be gone. "When the train stops, I'll get on" are the words of a dairy farmer who how recently assisted in the partial purchase of a nearby business.

More opportunities for collaboration, growth and acquisition
It is not inconceivable that the high prices for land and companies in recent years will gradually decrease to a lower and more balanced level. This means that sales are less likely to involve 'big money'. In this changing world, the potential stopper, like everyone else, needs to recalibrate regularly. For a number of entrepreneurs, this can be an earlier and more reason to start working together.

Working together with a fellow entrepreneur, but possibly also with a young man or woman who would like to become a farmer and cannot achieve this from home. These are opportunities for companies with entrepreneurs who are open to personal growth and development. With the necessary expertise and creativity, as we experience with regard to financing questions, the desired financing can still be properly implemented.

Be that as it may, new insights and ideas can be found in all kinds of places and moments. Perhaps that also applies to you, we listen to your story.

Farmers Funding & Advies unburdens you in the field of business administration, business economics, tax and legal matters and realizes the most suitable financing.
Curious if we can help you too? Click here to ask your question. 

Peter Pals

Peter Pals is an entrepreneur at Farmers Funding & Advies and grew up on a farm. From his farming heart, he has decided to build up a business for business, financial and tax advice for agricultural entrepreneurs.